The State of Louisiana and the New Orleans Hornets ended 10 months of negotiations on Wednesday by signing an amended lease agreement that extends the club's lease for two years, effectively keeping the team in Louisiana through 2014.

The Hornets will continue to be eligible to receive financial incentives from the state based upon ticket sales at generally the same amount as the previous agreement, which was signed in 2002 when the team relocated to New Orleans from Charlotte.

The new deal includes an option for the team to terminate the lease after the 2008-09 season if certain attendance benchmarks are not met. The Hornets can opt out of the agreement if the team fails to draw an average attendance of 14,735 for games beginning Dec. 1, 2007 to the rest of the season, and next season.

Opting out, though, would be costly for the Hornets. Owner George Shinn would would be on the line for up to $100 million.

Roughly $30 million of that would be penalties, reimbursements of past inducements from the state and relocation fees to move.

Shinn said one of the terms to the deal he struck with minority partner Gary Chouest, a Galliano businessman, when Chouest agreed to buy 25 percent interest in the team last July was that Shinn would be forced to pay back Chouest's investment, an estimated $62 million, if the Hornets moved.

"I've been blessed but I'm not Donald Trump," Shinn said. "I don't have that kind of money."

Shinn stressed that he has no interest in leaving New Orleans, adding that he spent $10 million to return the team to New Orleans from its two-year displacement to Oklahoma City because of Hurricane Katrina.

"We are going to make this work; we have to," Shinn said. "Everyone in the organization is in New Orleans because they chose to be here. We want this to be our home for a very long time, and we have great confidence that we will succeed."

Under the terms of the original lease, the Hornets were bound to the state through 2012 but state officials said they felt an obligation to the team to re-negotiate a more "common-sense" deal that addresses post-Katrina market conditions in the city.

The lease also relieves the state of its responsibility to construct a new practice facility for the team. The Hornets will continue to train in the Alario Center, which is in the midst of an $8.5 million expansion to the Westwego facility.

"Both the State and Hornets ownership have great confidence in the team's fan base," Gov. Kathleen Blanco said in a release. "With the team's performance on the court thus far and their work in helping rebuild New Orleans, I believe that the Hornets and their fans are on the right track. I am satisfied that this lease extension is fair, thorough and transparent."

The deal was expected to be signed on Wednesday afternoon by Shinn, Blanco and Doug Thornton, the regional vice president of SMG, the company that manages the Superdome and New Orleans Arena for the state. The state is expected to issue a release on the announcement later this afternoon.

"We believe in George Shinn and we believe in the Hornets," said Jimmy Clarke, Blanco's chief of staff who represented the state in negotiations. "We see this as opportunity to extend the lease by two years, not to shorten the lease. And at the same time it's a fiscally responsible move to the taxpayers. This is a win-win agreement for both sides."

The attendance benchmark of 14,753 is roughly 80 percent capacity of the Arena and reflects the team's average attendance in the city for the three seasons it played in New Orleans before Hurricane Katrina. The Hornets averaged 11,871 in their first 15 games this season.

"The NBA has reached out to assist New Orleans in its recovery," NBA commissioner David Stern said. "We are committed to making the franchise more successful than ever, and we hope that the Hornets remain in the city for many years to come."